Criminal Justice News

Wednesday, June 13, 2012

Montgomery County Man Pleads Guilty in Mortgage Fraud Conspiracy

Submitted
Fraudulent Applications to Obtain Loans Totaling Over $2.2 Million

GREENBELT, MD—Dennis O. Edwards, age 49,
of Silver Spring, Maryland, pleaded guilty today to conspiracy to commit bank
fraud in connection with a scheme in which he submitted fraudulent loan
applications to obtain over $2.241 million to purchase or refinance homes.
During the scheme, Edwards was unemployed and received Social Security
disability payments of approximately $1,000 a month.

The guilty plea was announced by United
States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent
in Charge Richard A. McFeely of the Federal Bureau of Investigation; and
Inspector General Steve A. Linick of the Federal Housing Finance Agency.

According to Edwards’ guilty plea, in
early January 2006, Edwards purchased a home on Dennis Avenue in Silver Spring,
Maryland, claiming on the loan application that he worked as a nurse and as a
mover, earning a combined $6,000 a month from both employers. In fact, Edwards
was unemployed at the time and received Social Security disability payments of
approximately $1,000 a month. Edwards obtained mortgage loans totaling
$342,000, based upon the fraudulent loan application.

A co-conspirator whom Edwards met while
he was purchasing the Dennis Avenue property worked as a loan officer for Bank
of America. The co-conspirator arranged for Edwards to purchase a property on
Riggs Road in Hyattsville, Maryland, obtaining a loan for $384,750, based upon
false information submitted to Bank of America. Edwards never lived at the
Riggs Road property. While the co-conspirator and Edwards were trying to sell
the unoccupied Riggs Road property, the co-conspirator arranged to refinance
the original loan, based upon a loan application that falsely stated that
Edwards earned $8,528 a month.

In January 2006, the co-conspirator
signed a contract to purchase a residence on Manorstone Lane in Columbia,
Maryland, for $1,595,000. To assist in getting financing for the Manorstone
Lane property, in March 2006, Edwards agreed to co-sign a loan for the purchase
of the property, at the request of the co-conspirator, with the understanding
that the residence would be used exclusively by the co-conspirator. The
co-conspirator submitted two loan applications in Edwards’ name to a Rockville,
Maryland mortgage originator for the purchase of the Manorstone Lane property.
Both loan applications falsely inflated the income and assets of Edwards, who
at the time had no income other than Social Security disability payments of
approximately $1,000 per month. For example, both loan applications stated that
defendant Edwards had monthly business income of $37,950 from a fictitious
company known as Edwards Consulting. In addition, both applications stated
falsely that defendant Edwards intended to make the Manorstone Lane property
his primary residence. The loan applications were subsequently approved as
follows: first trust financing for $1,196,250 and second trust financing for
$319,000. On May 3, 2006, at a title company in Rockville, Maryland, Edwards
signed the necessary documents. The deed transferred title to both Edwards and
the co-conspirator, but only defendant Edwards signed the promissory notes.
Edwards admitted that, given his limited income, he was not qualified to borrow
in excess of $1.5 million and that by signing the documents, he was
facilitating a fraud on behalf of the co-conspirator.

Eventually, the loans on the Manorstone
Lane property went into default. To forestall foreclosure, the co-conspirator
sent a $12,082.90 cashiers check to the mortgage company in June 2008. In 2010,
outside parties offered to buy the Manorstone Lane property for $970,000,
provided that the bank agree to a “short sale” which would have required the
bank to release its liens and suffer an immediate loss in excess of $625,000.
To encourage the bank to accept the short sale, another of Edwards’
co-conspirators drafted a letter, dated June 21, 2010, which Edwards signed,
stating that “[t]he main reason that [he] fell behind [in payments] is a severe
medical issue...chronic/terminal restricted lung disease,” falsely implying
that Edwards’s medical disability had occurred after he obtained the loans. In
fact, Edwards was already unemployed and receiving Social Security disability
payments when he obtained the loans.

Edwards faces a maximum sentence of 30
years in prison followed by five years of supervised release. U.S. District
Judge Peter J. Messitte scheduled his sentencing for September 10, 2012 at 9:30
a.m.

The Maryland Mortgage Fraud Task Force
was established to unify the agencies that regulate and investigate mortgage
fraud and promote the early detection, identification, prevention, and
prosecution of mortgage fraud schemes. This case, as well as other cases
brought by members of the task force, demonstrates the commitment of law
enforcement agencies to protect consumers from fraud and promote the integrity
of the credit markets. Information about mortgage fraud prosecutions is
available at www.justice.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is part of
President Barack Obama’s Financial Fraud Enforcement Task Force. President
Obama established the interagency Financial Fraud Enforcement Task Force to
wage an aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes representatives from a
broad range of federal agencies, regulatory authorities, inspectors general,
and state and local law enforcement who, working together, bring to bear a
powerful array of criminal and civil enforcement resources. The task force is
working to improve efforts across the federal executive branch, and with state
and local partners, to investigate and prosecute significant financial crimes,
ensure just and effective punishment for those who perpetrate financial crimes,
combat discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.

United States Attorney Rod J. Rosenstein
praised the special agents of the FBI and the Federal Housing Finance Agency
Office of Inspector General for their work in this investigation. Mr.
Rosenstein thanked Assistant U.S. Attorneys Gregory R. Bockin and Sujit Raman,
who are prosecuting the case.